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Research reveals companies unprepared for new energy economy

Jan. 26, 2018

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While global business leaders gather this week at the World Economic Forum Annual Meeting in Davos, Switzerland, to talk energy and environmental challenges, a new study released finds most organizations feel prepared for a decentralized, decarbonized and digitized future.

But many of those companies are not taking necessary steps to integrate and advance their energy and sustainability programs, revealed the report by Schneider Electric, a leader in the digital transformation of energy and carbon management and automation.

This false sense of security stems from the fairly conventional approaches companies still take toward energy management and climate action. And the gaps in innovation are further complicated by limited coordination between procurement, operations and sustainability departments, as well as inefficient data collection and sharing.

According to the survey of almost 240 large corporations ($100 million in revenue or more) from around the globe, 85 percent of respondents said their companies are taking action over the next three years to keep their carbon-reduction plans competitive with industry leaders. But the projects that have been initiated or are in development skew heavily toward energy, water and waste conservation. Outside of renewables, few of the organizations represented are implementing more advanced strategies and technologies to manage energy and emissions.

Key findings include:

Eighty-one percent of respondents have made energy efficiency upgrades or plan to within the next two years; 75 percent are working to reduce water consumption and waste.

Fifty-one percent have completed or are planning to pursue renewable energy projects.

Thirty percent have implemented or are actively planning to use energy storage, microgrids or combined heat and power — or some mix of the technologies.

Twenty-three percent have demand response strategies or plan to in the near term.

“We are in the middle of a massive disruption in the way energy is consumed and produced,” said Jean-Pascal Tricoire, chairman and CEO at Schneider Electric. “The near-universal focus on conservation is a positive. However, being a savvy consumer is only a part of what’s needed to survive and thrive. Companies need to prepare to be an active energy participant, putting the pieces in place to produce energy, and interact with the grid, utilities, peers and other new entrants. Those that fail to act now will be left behind.”

A primary barrier to progress may be internal alignment. Sixty-one percent of respondents said their organization’s energy and sustainability decisions are not well coordinated across relevant teams and departments, particularly true for consumer goods and industrial businesses. In addition, the same number of respondents said lack of collaboration is a challenge.

Data management was cited as another obstacle for integrated energy and carbon management, with 45 percent of respondents stating that organizational data is highly decentralized, handled at local or regional levels. And of the people who identified “insufficient tools/metrics for data sharing and project evaluation” as a challenge for working across departments, 65 percent manage data at the local, regional or national — not global — level.

More than 50 percent of companies represented have initiated renewable energy projects or plan to do so within the next two years, with health care (64 percent) and consumer goods (58 percent) leading the way. Plus, the C-suite and corporate functions have a high degree of involvement in these and other sustainability-focused programs. Seventy-four percent said C-suite members review or approve renewables and sustainability initiatives, for instance, indicating this work is seen as a strategic priority.

While ROI is the obvious benchmark for energy and sustainability initiatives, companies are starting to take a longer, more comprehensive view of investments. For example, more than half of the respondents said environmental impact is factored in to the evaluation process. Organizational risk (39 percent) is another important consideration.

The study was conducted by GreenBiz Research to identify how businesses develop energy and environmental strategies, collect and share data, and coordinate across departments — a practice known as Active Energy Management. Participants included professionals responsible for energy and sustainability management, from C-suite and board members to individual contributors. Companies surveyed represent 11 primary segments, including consumer goods, energy/utilities, finance, industrial, health care and technology.

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